Living in a territorial country like Thailand + LLC. Good idea?

[AnderLezuna]

Hi there guys,

My name is Andre, I am European and I am planning to go live to Thailand for a long period of time.

Since my partner is a local, we are planning to leave Europe and move to Thailand together, so after my tourist visa expires I want to study Thai language to get a student visa and I will stay for a long period of time living there and I plan to become a resident there.

In terms of work and money, I work online and I get between 2000$ and 2500$ a month through affiliate marketing.

My 2 questions and doubts are the following:

1- If I leave from Spain and I stay 183 days abroad with a tourist visa and then as a student, will I become a tax resident in Thailand? I do not own any property nor have anything under my name in my country. Moreover, I do not have any customer or interest in the country. I am planning to go to the embassy to register as living abroad but I fill in a form to inform I am not living in Spain anymore. I wonder if that would be enough or if it mandatory I pay tax in Thailand to get tax certificate and avoid problems with Spain. Any idea?

2- Right now all my affiliate partnership are registered under my name, but I was wondering if incorporating a company like a LLC in the USA would be a good idea. I have read that living in a territorial country + having a LLC is a good strategy for technically living tax free in Thailand?

I am not very proficient, so correct me if wrong and I am also open to hear any suggestion or idea you may have regarding this. I know you need to wait 1 year before introducing that money in the country but I have savings that would allow me to do that.

If I am not wrong, the expenses to create an LLC in New Mexico, Wyoming or Florida are not high (creating, monthly fee for a virtual address and a little more) and these seem to be the best places for what I have read.

The fact that you can use banks like Wise, Payoneer, Mercury or PayPal make it a good place for what I need I think, as I get money in USD and EUR.

I am new here in the forum but I have read some messages and I see here there's many of you that know a lot, so if anyone has read it all until here and wanna help I would really appreciate it.

Thanks for your time and any tip and response is welcome

Ander.

 

[username84447]

will I become a tax resident in Thailand?

Fairly simple rules for Thailand in this regard. A person who is in Thailand for a total of at least 180 days in a given tax year will be considered a tax resident of Thailand. I don't know anything about spain, but from a simple google search, thailand seems to have a tax treaty with spain. Without reading the tax treaty, this would most likely mean only one of the countries can claim you as a tax resident. Search for the 'thailand spain tax treaty' and have a read. Article 4 of the agreement talks about which country could claim you as a resident. If you don't fall under the 180+ days in thailand or the tax treaty by having your permanent home in thailand or whatever is required under article 4, then you'll have to reconsider whether spain will still be considering you a resident. I'm not familiar with spanish tax law.

I know you need to wait 1 year

Technically you'll find it isn't that you need to wait 1 year, it's that you can't remit the money to thailand within the same financial/calendar year. So if you make money in Dec 2021, you could remit that money in Jan 2022 and it wouldn't be taxable. But any money made in Jan 2022 would have to wait until the new financial year in the following Jan 2023 to be remitted.

 

[Sols]

Be careful with LLCs and make sure you understand how they are treated under local law wherever you end up going and how that affects your tax situation.

Unless otherwise arranged, an LLC is a pass-through entity whereby the company's entire profits become personal income for the members ("owners") of the LLC.

If you live in a jurisdiction which does not tax foreign corporate income but does tax personal income, there is a risk that the LLC gets the same treatment there as it would in the US: zero corporate tax, but full personal income tax.

 

[gnud]

Be careful with LLCs and make sure you understand how they are treated under local law wherever you end up going and how that affects your tax situation.

Unless otherwise arranged, an LLC is a pass-through entity whereby the company's entire profits become personal income for the members ("owners") of the LLC.

If you live in a jurisdiction which does not tax foreign corporate income but does tax personal income, there is a risk that the LLC gets the same treatment there as it would in the US: zero corporate tax, but full personal income tax.

Is there any list of countries that don't consider an US LLC to be a pass-through entity?

 

[Sols]

Is there any list of countries that don't consider an US LLC to be a pass-through entity?

Not that I'm aware of. Canada is a notable example, though.

It's probably untested in many/most jurisdictions.

 

[AnderLezuna]

Fairly simple rules for Thailand in this regard. A person who is in Thailand for a total of at least 180 days in a given tax year will be considered a tax resident of Thailand. I don't know anything about spain, but from a simple google search, thailand seems to have a tax treaty with spain. Without reading the tax treaty, this would most likely mean only one of the countries can claim you as a tax resident. Search for the 'thailand spain tax treaty' and have a read. Article 4 of the agreement talks about which country could claim you as a resident. If you don't fall under the 180+ days in thailand or the tax treaty by having your permanent home in thailand or whatever is required under article 4, then you'll have to reconsider whether spain will still be considering you a resident. I'm not familiar with spanish tax law.


Technically you'll find it isn't that you need to wait 1 year, it's that you can't remit the money to thailand within the same financial/calendar year. So if you make money in Dec 2021, you could remit that money in Jan 2022 and it wouldn't be taxable. But any money made in Jan 2022 would have to wait until the new financial year in the following Jan 2023 to be remitted.

Hey @username84447 ,

Thanks a lot for taking your time to reply me.

You answer helped me a lot.

I read the tax treaty and yeah, it turns out that if you are +183 days abroad and you have a place rented there, then you are a tax resident in Thailand.

I also take note of the appreciation of the fiscal year detail, pretty useful

Be careful with LLCs and make sure you understand how they are treated under local law wherever you end up going and how that affects your tax situation.

Unless otherwise arranged, an LLC is a pass-through entity whereby the company's entire profits become personal income for the members ("owners") of the LLC.

If you live in a jurisdiction which does not tax foreign corporate income but does tax personal income, there is a risk that the LLC gets the same treatment there as it would in the US: zero corporate tax, but full personal income tax.

Hey @Sols,

Sorry I do not know how quote properly 2 quotations (yet), I am pretty new here

The detail you mentioned is pretty interesting because according to what you just said, any territorial country would tax you, right?

All territorial countries tax you for personal income tax (if generated inside the country) so for that an LLC + living in a territorial country scheme would not work at all.

I thought that the trick here was the fact that your personal tax income, if transferred in the next fiscal year (case of Thailand as many other countries do not have this rule and is just tax-free), was gonna be tax-free.

Let's see if anyone reads this by any means and can add clarity to that.

Thanks for all the help and suggestions guys

 

[kkein]

Not that I'm aware of. Canada is a notable example, though.

It's probably untested in many/most jurisdictions.

How about Cyprus? iirc LLCs in Cyprus are called Ltd? and for those there's the 12.5% corporate tax on dividends. Or am i mixing up things?

 

[Sols]

I'm not aware of the tax authority or a court in Cyprus having issued specific guidance on a US LLC.

The company law in Cyprus is written in Greek (and Turkish), not English. When translating the Greek version to English, it is sometimes translated as LLC (Limited Liability Company) but the underlying law is based on English law, so the companies are often also called LTDs (Private Limited Company).

This is not the same as a US LLC entity being treated as a Cypriot private company.

 

[gnud]

How about Cyprus? iirc LLCs in Cyprus are called Ltd? and for those there's the 12.5% corporate tax on dividends. Or am i mixing up things?

You're mixing up two jurisdictions.

 

[Puzel12]

anyone know if US LLC can be tax exempt in Thiland based on remittance in the next calendar year? I heard that if you are self-employed / working for company outside of Thailand, this is not considered foreign sourced income as the job is done from Thailand.

 

[disconnected]

In reality no one in Thailand cares. Most foreigners in Thailand don't have a work permit, so no tax id number either. You don't even have to remit any money to Thailand. Thailand is mostly a cash society anyway. Just withdraw cash from your foreign bank account, happy days. I've lived there for years and know many others who have and no authority ever asks about any tax or income.

 

[zzzzzz]

In reality no one in Thailand cares. Most foreigners in Thailand don't have a work permit, so no tax id number either. You don't even have to remit any money to Thailand. Thailand is mostly a cash society anyway. Just withdraw cash from your foreign bank account, happy days. I've lived there for years and know many others who have and no authority ever asks about any tax or income.

Can you explain how remittance works there? Is depositing cash to thai bank account remittance? What about bank transfer from abroad? Does bank take x percent for thai taxes? How exactly they check what was earned in previous year in case of foreign profits/income?

 

[NicolasMaduro]

Can you explain how remittance works there? Is depositing cash to thai bank account remittance? What about bank transfer from abroad? Does bank take x percent for thai taxes? How exactly they check what was earned in previous year in case of foreign profits/income?

They dont check proactively

You just make sure you only take income from 2021 into 2022.

Ive been looking into Thai Elite Visa. Its like 20.000 usd. And they will personally make sure you get a bank account in Thailand. Then you can stay 12 months a year in Thailand and pay 0% tax.

 

[zzzzzz]

They dont check proactively

You just make sure you only take income from 2021 into 2022.

Ive been looking into Thai Elite Visa. Its like 20.000 usd. And they will personally make sure you get a bank account in Thailand. Then you can stay 12 months a year in Thailand and pay 0% tax.

I was also looking at elite visa (5/10/20 years), it's a longterm tourist visa. I'm just not sure about taxes, remittance and how this works in practice. Maybe they see the cost of visa as some kind of lump sum taxation? Has anyone tried it and can tell more about it from firsthand experience?

Taxation:
"Individuals are deemed to be tax resident in Thailand only if they stay in Thailand for an aggregate period of not less than 180 days within a calendar year. Any Thai or foreign individual who derives assessable income from sources in Thailand or for work performed in Thailand is liable to pay personal income tax, whether or not such income is paid within or outside Thailand. In addition, a resident of Thailand is liable to personal income tax on assessable income derived from sources outside Thailand and remitted into Thailand in the same year in which such income is derived (remittance in the following year is not subject to tax). The same logic applies to all types of income (including pensions, capital gains, interest, etc.). They are tax-free if they are earned abroad (from foreign sources/companies/shares) and not brought into Thailand within the same tax year."

 

[Puzel12]

what structures will work in Thailand as for now with self-employed / freelancers?

 

[RealDude]

what structures will work in Thailand as for now with self-employed / freelancers?

Canada LLP with Wise and residency in Thailand. Money transfer once a year (e.g. 1.1.20xx).
PS: according to the Internet

 

[Puzel12]

Canada LLP with Wise and residency in Thailand. Money transfer once a year (e.g. 1.1.20xx).
PS: regarding internet

Is it the same possibility with US LLC? I wonder how it works because you are 100% owner of the US LLC or Canada LLP. So the company is managed from thailand, right? And then the money goes to..? Wise on Canada LLP details, right? Can you then invest it in stocks by brokerage with registered thai residency?

 

[RealDude]

Is it the same possibility with US LLC? I wonder how it works because you are 100% owner of the US LLC or Canada LLP. So the company is managed from thailand, right? And then the money goes to..? Wise on Canada LLP details, right? Can you then invest it in stocks by brokerage with registered thai residency?

LLP = Limited Liability Partnership

 

[Puzel12]

LLP = Limited Liability Partnership

Do you know any tax advisor that I could talk through it with? I'd love to learn more about canadian LLP

 

[startfleetio]

Canadian LLP would need two partners, and the only "bank" you can get remotely is Wise.